U.S. stocks fall most in 5 weeks; Treasurys rally

NEW YORK (MarketWatch) — U.S. stocks ended Thursday with the worst declines in more than five weeks, with the S&P 500 closing below a key technical level and turning negative year-to-date. Investors flocked to safety, bidding up Treasurys.

Strategists pointed to stretched fundamentals that made the market ready for an overdue correction. Technology and industrial sector stocks led the losses on the benchmark while all 30 components of the Dow industrials finished the day lower.

The S&P 500
SPX, -0.23%
closed 21.86 points, or 1.2%, lower at 1,846.34 and erased modest gains for the year. The Dow Jones Industrial Average
DJIA, -0.32%
dropped 231.19 points, or 1.4%, to 16,108.89, falling for the fourth consecutive day.

Uri Landesman, president at Platinum Partners, says fund managers had been expecting a correction even as markets have been resilient up to this point.

“At these levels markets cannot tolerate any bad news. Fundamentals have been so stretched that we think we will have a significant correction by the end of this month,” Landesman said.

“We are watching at what level the S&P 500 closes today, if it goes below 1,850 it might turn into the beginning of the correction,” he added.

Earlier, a pair of better-than-expected economic reports, which showed a surprise drop in the number of people claiming unemployment benefits and an uptick in retail sales in February supported stocks. Then gains quickly turned into losses.

In the absence of major economic news, investors will focus on the Fed’s policy-setting meeting, scheduled for March 18-19, at which the central bank is expected to keep up the pace of monetary stimulus reduction.

Overseas markets

Asian markets were mixed, with the Nikkei 225 index
NIK, +0.30%
ending slightly lower, and the Hang Seng Index
HSI, +0.56%
falling 0.7% after data showed China’s industrial production slowed in the January-February period, while retail sales in January eased.

The Shanghai Composite
SHCOMP, -1.13%
rose 1%. Some attributed this to comments by Chinese Premier Li Keqiang, who said he was confident the Chinese economy would meet its 7.5% growth goal for this year.

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